When to Come Out: The Challenges Facing Gay CEOs

Being gay or lesbian in America in the past half decade has meant watching barriers fall in some surprising quarters. Institutions as seemingly unyielding as marriage, the military and professional sports have opened their doors to a degree unimaginable just a few years ago. But the way is still barred to one coveted spot: In the U.S., where attitudes have evolved most dramatically, no openly gay CEO exists in the Fortune 500, many note.

Why it matters and what’s at stake in the continuation of such a vacancy is decidedly different than, say, the dearth of women, Hispanics or African Americans in the top perch. That’s because gay men and women can hide what sets them apart, and they sometimes pay a terrible price for their secrecy. John Browne, the former CEO of British oil firm BP, lived in the closet for decades as he worked his way up in an industry dotted with a curious mix of others like him as well as macho roughnecks, stepping down in 2007 after a London newspaper paid a male escort to expose his relationship with Browne.

But that was then, and Browne’s story as told in the tabloids had some unique contours to it — some true, some not. Today, as change accelerates, there is a growing feeling that the rewards of a major CEO coming out outweigh the risks. “Once that top CEO comes out, which I think will be in the next year, then you’re going to see some others,” notes Kirk Snyder, a corporate diversity consultant and professor of clinical management communication at the University of Southern California. “Whoever that first guy or woman is — wow, they are going to go down in history forever. Once we have one, two or three CEOS out of the closet, and everyone sees that the companies are just as successful, the other folks in the closet thinking ‘I can’t’ will [come out]. It’s an extremely important message to send.”

Monica McGrath, vice dean of Wharton’s Aresty Institute of Executive Education and an experienced coach to Fortune 500 executives, says she has come across gay CEOs in the closet, and “it’s don’t ask, don’t tell,” she says, referencing the Clinton-era directive toward gay people serving in the military. But her familiarity with several company succession plans leads her to believe that change is on the way. “The C-suite is younger, and younger people are confused as to why this is an issue,” she points out.

In fact, business students coming up are eager for role models. “I think the choice of where and when you come out is a very personal one,” notes Mira Patel, an MBA student and co-president of Out4Biz, Wharton’s gay, lesbian, bisexual and transgender (GLBT) student group. “I lost the support of my parents when I came out, so I understand…. But as more of our leaders come out, part of the sea change of progress continues to be that we will see more and more other people come out, and it will be increasingly true that people from business schools will change what our world looks like.”

“Once we have one, two or three CEOS out of the closet and everyone sees that the companies are just as successful, the other folks in the closet thinking ‘I can’t’ will [come out].” –Kirk Snyder

Rapid but Incomplete

After decades of being silent on the subject of its GLBT workers, or sometimes being openly hostile to them, corporate America has largely decided that they are good for business. Last year, as the Supreme Court was weighing whether to strike down the Defense of Marriage Act (DOMA), a wide swath of American corporations from BlackRock to Walt Disney signed on to a friend-of-the-court brief urging its repeal. DOMA was infringing upon the rights of companies to conduct business as they saw fit by asking firms to renounce their principles, “or worse yet, betray them,” the brief stated. Marriage equality, these corporations concluded, was a positive step for American business.

But gay- and lesbian-supportive laws and policies do not exist across the board by industry, or geographically. As in the U.S., views on homosexuality have changed in Europe, Asia and Russia, often becoming more liberal, though not always. Russian president Vladimir Putin has made gays and lesbians a special target of government harassment and hostility in recent years. Much of Europe has enacted GLBT-supportive laws, though generally, rights grow more restrictive from Western Europe moving east. In China, homosexuality was removed from the government’s list of mental disorders in 2001, but the issue has sprung to life in recent years, with Chinese gay activists advocating anti-discrimination laws and same-sex marriage. No one predicts the government will capitulate anytime soon, but advocates go about their business without being harassed. Violence against gays persists in India, where homosexual behavior is still a crime, although in recent years gay issues have become more widely accepted and discussed in media and through popular films like Don’t Know Why.

In his recent book titled, The Glass Closet: Why Coming Out Is Good Business, Browne points out that in 77 countries, homosexual acts between consenting adults is still illegal. It is punishable by death in five countries, though he predicts that change is on the way. In 2013, United Nations secretary-general Ban Ki-moon began a major drive to repeal anti-gay laws around the world, calling such laws “an outrage.”

And yet, even in the progressive U.S., gays and lesbians face obstacles. The Human Rights Campaign notes that laws prohibiting workplace discrimination on the basis of sexual orientation are non-existent in 29 states. In a recent study by the HRC of 800 gay and lesbian workers across the U.S., 53% said they were not out in the workplace. Gays and lesbians have other reasons to worry. In a 2011 Harvard University study published in the American Journal of Sociology, fictitious resumes were sent to companies in the South and Midwest in response to postings for more than 1,700 entry-level white-collar job openings. Resumes listing experience at a gay organization were 40% less likely to elicit a call for an interview.

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Moreover, working at a company with posted gay-friendly policies does not guarantee the same path to success for gay and lesbian workers as straight ones. “There are organizational values and beliefs that are often unstated, and it doesn’t take very long to understand what these values are and what is acceptable,” says McGrath. “[Your company] can have the most moving vision statement, but you know that it’s not the right thing to have your gay partner’s picture on your desk in the executive suite. There are subtle discriminatory practices that you pick up, and if you really are ambitious, you are not going to buck the tide. I can think of some incredibly successful, bright people who simply do not feel safe coming out.”

For a CEO, being gay is even more complicated. Everything a CEO says and does, McGrath notes, becomes magnified — to the board and staff, and to customers and shareholders, many of whom may live outside of the more liberal coasts and big cities. “Let’s be frank. We may be moving in a direction that many of us feel was a long time coming, but not everybody is on the same wavelength around this,” she says. “If you are at the CEO level — and I am thinking of someone I worked directly with — [coming out] can be a distraction to you and the message you are trying to deliver.”

“Let’s be frank. We may be moving in a direction that many of us feel was a long time coming, but not everybody is on the same wavelength around this.” –Monica McGrath

She points to JPMorgan Chase’s $2 billion market cap drop (about 1%) after CEO Jamie Dimon announced July 1 that he had throat cancer as evidence that “everything you say in that most senior role has a really high profile. Everything you say matters.”

From Liability to Commodity

Ironically, many of the same workplace dynamics keeping gays and lesbians from reaching the top rung may have, at the same time, forced them to develop skills that make them better leaders. In a five-year study involving 3,500 professionals, USC’s Snyder examined employees of out gay bosses and found 25% to 30% higher levels of job engagement and satisfaction. It had nothing to do with the sexual orientation of the boss per se, he says, “but with the management style of the boss.” While being a closeted gay boss was read by employees as “closed, angry and unfair,” the “process of coming out of the closet manifested itself in seven principles of leadership that not everyone had,” Snyder notes — inclusion, creativity, connectivity, adaptability, community, intuition and collaboration.

“I think it’s about an appreciation of what an individual brings to the workplace, taking the time to recognize what the individual talents are, and that was met very positively by employees,” says Snyder. “I will never forget one woman who said that her [gay] boss was the first boss she ever had who recognized that she was a single mom and gave her time off to attend her daughter’s dance recital.” She was so grateful, Snyder adds, “that she would stay up until 2 a.m. to write the best report she could.”

Because gay people are often examining the world around them for clues about acceptance and rejection, they have a heightened sense of intuition, and that translates into better hiring decisions, says Snyder, whose research was published in the book, The G Quotient: Why Gay Executives are Excelling as Leaders… And What Every Manager Needs to Know. “Growing up [gay] in a straight world manifests itself in positive leadership traits,” he notes.

This idea resonates with Glen Senk, the former CEO of Urban Outfitters who is now working with Berkshire Partners on co-investing in innovative, high-growth retail and consumer businesses. “I think going through that struggle probably made me a better CEO,” he says. “It built character and gave me a high level of empathy, which is one of the most important traits in a CEO.”

Senk, 58, who once identified himself as the only out gay CEO at a major U.S. corporation, was never in the closet, and says he never encountered any friction for being gay. But he allows that his particular field, retail, might have had something to do with it. “One reason I went into the industry I chose is I felt it would be easier than investment banking. It was gay-friendly when I joined it.” Still, he notes, “I wish I had had a role model when I was in college telling me it was OK to be who you are, and you can do anything you want.”

Being an out gay CEO might not have been a liability in retail, but in John Browne’s realm it was a dangerous idea. In his book, Browne tells the story of what it was like to be an oil-industry executive in the closet. “After becoming chief executive, I regarded personal discretion as vital to the company’s interests,” Browne wrote. “I became more reserved and less willing to seek out companionship. I had regular dealings with business and political leaders in a number of socially conservative countries. I was worried that any disclosure would damage business relationships, particularly those in the Middle East, in some countries in which homosexuality was still punishable by death.”

Making his case that being out is good for business, Browne argues that there are hidden costs and psychological tolls for being in the closet that no business can afford; that coming out benefits the productivity of other, non-gay co-workers, and that teamwork is only possible when workers bring their whole, authentic selves to the workplace. He quotes Peter Sands, CEO of Standard Chartered Bank: “In a world where business success is all about unleashing people’s creative energy and imagination, it makes no sense to cripple so much talent.”

“I wish I had a role model when I was in college telling me it was OK to be who you are, and you can do anything you want.” –Glen Senk

Senk puts it this way: “When you are running an organization and have thousands of people you are trying to align around an objective, there’s not time for hidden layers. You need trust, and in order to have trust, you need to be honest. Who wants to live a double life? Look at the burden. I do hope that anyone not open feels able to come out.”

The How and When of Coming Out

One highly visible American CEO appears to be taking a more nuanced approach to the question of being out. Apple’s Tim Cook has written in The Wall Street Journal about the importance of Congress passing the Employment Nondiscrimination Act, marched alongside other Apple workers at San Francisco’s Pride Parade, and occupied the No. 1 spot in Out Magazine’s Power List 2013 of influential gay men and women (in 2014, he slipped to No. 2). He has, however, not publicly addressed the question of whether he is, in fact, gay.

Some, such as gay blogger John Aravosis, say that trying to occupy two spaces at once — defending gay rights, but not proud enough to admit it himself — means that Cook is signaling that there is something wrong with being gay. Why isn’t he responding to the question of whether he is gay? “We can all hypothesize about why, but no one knows but him,” Snyder notes. “Some people say that it’s because the market share of Apple is so tremendous in Asian cultures and in the Middle East, and maybe we can give a little credence to that. But I don’t know that that’s true in 2014.”

But when and how one chooses to come out matters, according to Wharton management professor Katherine Klein, vice dean of the Wharton Social Impact Initiative. “One of the things that research with leaders who are out says is that coming out is a reiterative process — you do it over and over again,” she says. “So I suspect the strategy of coming out slowly and getting people used to the idea is not a bad idea. By the time it’s announced, people say ‘We all knew that.’”

How a person explains his or her choice to come out publicly may also be important and influence how the public responds, Klein notes. “Announcing that you’re doing so for positive reasons seems appropriate and wise — [saying] I want to be an authentic leader, I want others to feel safe within the company, I want teenagers not to commit suicide, and as a leader I know that we need all the talent we can find and I don’t want anyone to feel uncomfortable at this company. There are lots of ways of framing that.”

Klein says the longer Tim Cook — presuming he is gay — waits, the easier it will be, because CEOs of smaller companies will have inured the media to the news value of a gay CEO. “In Washington, D.C, the principal of my kids’ high school made a very public statement that he was gay with the mayor by his side. As more and more of those kinds of events happen, the reverberations for larger companies when their CEOs announce they are gay will be less and less.”

Of course, as the news value diminishes, so does the chance to be a pioneer. Who will seize the moment? “I think [Cook’s] being circumspect seems appropriate. Does authentic mean full disclosure? I don’t think so,” says McGrath. Still, she adds, it’s an opportunity to focus on how well the job gets done rather than other aspects of a CEO’s identity. “We are on the cusp of enormous change. If we can forge that kind of mindset change in corporate America, I think we will pave the way for a lot of marginalized groups to feel encouraged.”